Generation companies raise concern over WESM trading platform changes

Power generation companies (GenCos)
have formally raised their concern with the Philippine Electricity Market
Corporation (PEMC) on the trading platform changes being introduced in the new
market management system (NMMS) of the Wholesale Electricity Spot Market.

The power firms noted that the
scrapping of nomination of minimum stable loading (Pmin) of conventional plants
could unduly affect the operational capabilities of some generating facilities
– primarily coal and geothermal plants.

The new trading platform for the
spot market is expected to take off for both Luzon and Visayas markets by June
this year. PMin or the minimum load nomination of generating plants account for
40 percent of system demand, according to PEMC.

Luis Miguel Aboitiz, senior vice
president and chief operating officer of Aboitiz Power Corporation and
immediate past president of the Philippine Independent Power Producers
Association (PIPPA), has admitted that the matter was already discussed at the
PEM Board.

Nevertheless, he stressed “the
problem is they’re just looking at technical issues, they’re not looking at
commercial issues. Depending on the case, certain coal plants in some locations
or geothermal plants may be affected negatively.”

PEMC President Melinda L. Ocampo, in
a previous briefing with reporters, has indicated that the trading shift
requiring PMin of plants to be offered also in the market, “is to ensure level
playing field among generators.”

Under the existing WESM-MMS, power
generators are required to nominate their PMin or their minimum stable capacity
that can be called for dispatch. Such being treated as “hard limit” in the
Market Dispatch Optimization Model (MDOM), the plants’ nominated PMins are
“price takers” in the market.

“Under the new MMS, even PMin
(minimum load of plants) will have to be offered, they will no longer be
considered price takers, they will have to compete for price and volume for
dispatch in the market,” Ocampo noted.

The WESM operator said with Pmin
being regarded as price taker, other generating facilities especially those for
“peaking” which are running on more expensive fuels such as diesel, “are being
discouraged to participate in the market actively through offer submissions.”

PEMC emphasized that “some
participants would choose not to submit offers rather than operate their
generator at Pmin.”